Should You Buy or Lease a Car? 🤔

Should you buy or lease a car? Now, I'm going to disagree with many of those Americans again who say that you should buy a car. Now, there's also people who say the, um, gurus who lease cars aren't credible influencers or gurus because they don't buy their cars. This is not strictly true. Now what you've got to look at when you're deciding between buying or leasing a car, and this is important, is the full cost of the car through the term. Now I was going to say the full cost of ownership, but that word ownership's a bit of a distraction. Now I've got 7 or 8 different reasons why I believe it's usually more cost-effective to lease a car rather than buy a car. And most people don't understand this. So the first thing is, forget what, um, critics say of gurus— oh, I don't even own his cars, leases all his cars— when in fact it's probably cheaper to lease. Or the guru influencer might be leasing it through a limited liability partnership I run a Lamborghini Aventador through a limited liability partnership. I run a Porsche Panamera Turbo S through a limited liability partnership. And those cars, I don't have company car tax on them. You would if it was a limited company, so always get good financial advice. But those cars are pre-not post-tax paid, uh, and offsettable against um, all the expenses against the company, and you can claim the VAT back anyway. I'll come back to all of the details in a moment. Michelle has said it depends what car. That's true. So many high-end marks— I have, I have a Ferrari Testarossa, a vintage Ferrari, and that's far better to buy than to lease. It goes up in value, it's cheaper to buy, so I bought it cash. I have an Ariel Atom. I bought that 3 or 4 years old, much cheaper and better to buy than to lease. Also usually goes up in value. Now, a car that goes up in value, it might be better to buy it and own it, although of course many cars depreciate. Okay, right, so reason number 1 why it's better to lease than to buy is because you have cost of capital of buying. So whether it's 10 grand or 100 grand, when you buy that car you have cost of that capital, opportunity cost, where you can't take that capital and you can't invest it in other assets for a return. And that capital may have taken you many years to build up. So you've taken capital, it's taken years to build up, you've put it into a car which is going to go down in value, so you're gonna— it's gonna take you years to build that capital back up, and that capital can't earn interest and income for you. Reason number 1, why it's often better to lease than it is to buy. Reason number 2 is the actual ownership of the length of the term is usually more when you buy than when you lease. And the main reason is depreciation. Now, in leases, depreciation is supposed to be factored in, but many car companies don't look to make any or anywhere near as much profit on selling the car to you than they do on the maintenance and the servicing. They'll make much less, skinnier margin on the purchasing, on the sale of the car. And also, they'll often put their, their surplus stock through backdoor leasing companies. So the actual ownership when you, um, buy a car is more through the term of owning the car, whether it's 2, 3, or 5 years. Maintenance especially, depreciation especially. And then you've got sale costs. So when you buy a car, it takes you a lot of research and time and energy. When you sell a car, you're going to get chipped down and haggled, and you might get a bit of a dud. And that could be 10 or 15 or 20% of the value of the car all told. So I'm going to share with you my other 3 or 4 or 5 points. Just let me know in the comments, do you prefer to buy or do you prefer to lease? And, uh, once I finish this video, I'll go in and discuss and engage with your comments. So what a lot of people do is they get hit up with ownership. Well, if I lease the car, I don't own it. But if you buy it, you don't own it. If you buy it, you'll own it for as long as you own it, and then you'll sell it. It's no different from leasing and then giving back the lease. So let's say you own a car for 5 years or you lease a car for 5 years, there's no actual difference. And by the way, if you get in some financial trouble, lenders could take that car as collateral from you, whereas if you get in financial trouble, the lease company is the one that's losing out, not you. So something to think about there. Although of course, always pay your debts. Your reputation is everything. So make— this ownership thing doesn't really make much difference. Now look, if I'm a classic vintage Ferrari Testarossa, I kind of want to own that, and that is definitely much cheaper from my diligence and research to own than to buy. But your everyday cars, especially the German marks, the BMWs, the Audis, you know, the Volkswagens, the Mercedes, all of these cars usually much cheaper on a lease, by the way. Okay, next thing then is is you can normally get a £60,000 car with 3 to 5 payments down and as little as £350 plus VAT a month. If you bought a £60,000 car for cash, that's £60,000 tied up. That £60,000 car will probably go down to £40,000 or £30,000 in 3 years' time, whereas you don't get anywhere near that depreciation on a lease. Now, Marcus said own everything. Well, I think ownership is often a myth. Look, I love to own property, I love to earn income-producing assets, but when it comes to liabilities like car, you're probably best not owning them. You should own assets and rent liabilities. What does it say? If it flies, floats, or drives, you should probably lease it, not own it. So you could not get a £60,000 Merc for £350 a month unless you lease it. And then a £60,000 Merc will be £40,000 or £30,000 in 3-odd years, but you'll only pay about £350 a month, roughly speaking, on a lease deal. And when you get a, um, business lease, you can claim the VAT back as well, which you can't on, um, a new purchase of a car. The next thing is you can get a much newer car for much lower actual money. And when you get a newer car, you've got warranty and much less maintenance and upkeep. When you get a secondhand car, you've got to get the warranty, the maintenance, the upkeep. I had a 4-year-old Range Rover, the engine blew, cost me 12 grand just out of lease. You don't get any of those issues with a new car because you get warranty. You don't really have any, um, maintenance. You'd have tires You'd have general servicing, and that's probably it on a lease. So when you compare something like a $60,000 Merc, you're going to roughly pay $10,000 over 2 years on a lease, but owning it, it could cost you $30,000 or more over the same period. So some things to think about. Now, if you own a company, especially an LLP, you can buy up to one car per partner in the LLP. You can offset the capital value of the car and put it on your balance sheet, and any depreciation can go against your tax and offset. Any management and maintenance and fuel and everything else can be paid, um, as, um, through the company and offset against your tax. So you can literally have a car pre-tax rather than post-tax. And by the way, when, um, cars are coming to the end of their line they'll often put them through on a cheap lease. So you might get a nice BMW M4 end-of-line lease or some kind of nice German marque. Normally the high-volume cars are the better lease deals. The Ferraris, the Lamborghinis are often better to buy or to do a different type of finance structure. So there you go, there's 6 or 7 reasons why I believe it's much better to lease than it is to buy on most cars, not necessarily all, but most. And don't listen to all this claptrap, 'Oh well, don't own their cars, they lease their cars, supposed to be millionaires, lease the cars.' They're smarter with their money usually. Now of course some people are renting a car for a week and doing a photo shoot, but generally millionaires are smarter with their money. And my business partner, he's really great at working out the actual cost. So what you've got to do is work out, over the term that you're going to have the vehicle, what is the actual cost to you, all things in— depreciation, maintenance, buy and sale costs and time, opportunity cost of capital, all of that. And when you line cars up next to each other, many of them, especially the high-volume marks, are way cheaper on a lease. So let me know what you think in the comments. Now, if you want to get better financial education and knowledge if you're liking this kind of content I'm doing, giving you stuff they should be teaching you in school about money but they're not, um, and, you know, helping you creating better income streams and making better financial choices, I recommend that you join Rob.team. So Rob.team is my private members area. It's for you if you want to start or scale a business, get better financial education and knowledge, create multiple streams of recurring income, invest in assets, know the difference between an asset and a liability, and not just survive but thrive in these challenging economic times. That— they are all the things you're going to learn on a weekly basis on rob.team. Rob.team is just the cost of a large coffee to join. It's one-third of the cost of Netflix. You can cancel anytime. There is no contract, and you can get content going back 3 years. So here's how you join. 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And how teachers who are on 50 grand are teaching business, economics, and finance. It's a travesty. And most people on, you know, who you watch or see on the internet get this stuff wrong. Like, so many of these American influencers— I'm friends with a lot of them, by the way— but so many of them are either giving bad advice or one-sided advice or advice that's only relevant to America. Like, they say you should rent and not buy your own home. I completely disagree. There's a dozen reasons why you should buy and not rent your own home. People are saying it's better to buy a car than to lease a car. Well, I've given you 8 reasons why it's often better to lease a car. So it's all about information. Learn to earn and then invest. And this is, you know, my mission with Rob.team. My mission is to help as many people on this planet get better financial education and knowledge. But you have to help yourself first, because to know and not to do is not to know. So go and join rob.team right now. It'll cost you a large coffee. It's one-third of the price of Netflix. On Netflix, you will lose your mind watching thrillers and horrors and murders. On rob.team, you will build your mindset and your skill set and your wealth, learning about how to invest, start and scale a business, and get better financial education and knowledge. So I'll see you in rob.team. Type in rob.moore.team. And now I'm going to do a quick summary. So let me know in the comments, do you think that it's better and cheaper to buy a car or to lease a car? Let me know what you think in the comments. Now the first answer is it depends. If it's really high-end cars, they're probably better not to lease. They're probably better to do some kind of hire purchase or purchase. Or get a separate, more bespoke finance agreement on them. Um, with classic cars, it's often better to buy them cash. I bought my Ferrari Testarossa cash. I bought my Ariel Atom cash because they go up in value, um, and the finance doesn't— is not quite as beneficial. However, on the volume cars like BMW, Mercedes, Audi, Volkswagen, all of that, your normal cars, It is 80% of the time way better to lease. Number 1, you have opportunity cost of capital if you buy a car that you can't get a return on that took you years to collect. Number 2, over the period of owning a car, you have massive depreciation, and that's nowhere near as high on most leased cars. Number 3, when you buy a car, you've got to sell the car, and there's sales car costs, warranty costs, repairing and maintenance, and you could get screwed over costs. Whereas when you get a lease, it's always a new car, and therefore you've got the warranty and you haven't got the maintenance, etc. So lots of reasons why it's probably better to lease than it is to buy. Generally, it'll cost you about 10 grand over 2 years to lease a 60 grand German car, whereas it might cost you 25 or 30 grand to own the thing. Hmm, some things to think about. And you can often get end of term and end of line even cheaper lease deals, go on somewhere like contracthireandleasing.com. So let me know what you think about whether it's better to hire, to lease, or to buy. Let me know about what you think about the points that I've made. Have I changed your mind? Have I challenged your thinking? Please also hit the share button. 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